Bitcoin ETN: invest easily in the BTC

Bitcoin ETN

The trading crypto currencies like Bitcoin is gaining popularity. Many private investors are wondering how they can most easily trade the crypto coin. One possibility is to use a Bitcoin ETN for this. We will go into this topic in more detail below.

  • Bitcoin ETNs work in a similar way to ETFs
  • As an investor, you therefore have an easy way to benefit from the price movements of the BTC
  • ETN have both strengths and weaknesses
  • The price potential of the BTC is still very large

What is a Bitcoin ETN?

  • ETN is an abbreviation for Exchange Traded Notes
  • ETNs are comparable to an ETF in some ways, but there are also differences
  • Bitcoin ETN try to map the price development of the BTC as precisely as possible
  • Bitcoin ETN therefore usually hold cryptocurrencies themselves
  • For investors, ETNs are an easy way to invest in Bitcoin
  • ETNs can be bought and sold on an exchange, for example
  • A frequently traded ETN is, for example, the Vaneck Bitcoin ETN
  • Due to the strong price movements, Bitcoin is very popular with many investors
  • For example, there is also the option of using a CFD broker for trading crypto currencies

ETN on Bitcoin

The ETN concept is best understood when one is familiar with ETF. ETFs are exchange-traded funds. These usually map a share index. For example, ETFs on the DAX or the Dow Jones Index are popular.

An ETF is a fund. However, these are usually not actively managed. Rather, the composition results from the fact that a certain index is mapped. This way, it is very easy for investors to invest in various stocks. For example, there is no need to purchase individual shares.

The specialty of an ETF is that you can buy and sell the fund on the stock exchange. This makes trading very easy.

One of the main advantages of ETFs is the fact that their assets under management are so-called special assets. This means that in the event of bankruptcy, the fund’s creditors will not have access to it. This is very good news for investors. Because in this case he does not bear the risk of the company going bankrupt.

ETN BITCOIN: What you need to know

Bitcoin ETN: invest easily in the BTC

As I said, ETN follow a similar concept to ETF. An ETN therefore also tries to map the price development of a certain underlying asset. Unlike an ETF, an ETN can also invest directly in currencies and cryptocurrencies, for example.

Another thing they have in common with ETFs is that ETNs can also be traded on the stock exchange.

The big difference, however, concerns the case of insolvency: Because in this case it is not a special fund. For investors, this means: You bear the risk of bankruptcy. In summary, this means:

  • ETNs are comparable to ETFs in some respects
  • Both financial products are traded on the stock exchange
  • This makes trading very easy for the investor
  • ETFs often map the price development of a stock index
  • ETN, on the other hand, usually focus on currencies and cryptocurrencies
  • With an ETN, the investors bear the risk of bankruptcy

Are Bitcoin ETNs a Good Solution?

As I said, Bitcoin ETN are an easy way for investors to invest in cryptocurrencies like Bitcoin. But there are also alternatives.

For example, ETFs now also exist. However, there is a small restriction to be noted here:

The ETFs that invest in Bitcoin are not yet allowed to do so directly, but only via Bitcoin futures. As a result, the prices of the ETF usually do not correspond 100 percent to the actual Bitcoin price.

More ways to invest in the BTC

As I said, there are other ways to benefit from Bitcoin’s price movements . It is therefore not absolutely necessary to choose a Bitcoin ETN.

As an investor, you can, for example, buy and sell Bitcoin directly. To do this, it makes sense to use digital marketplaces for cryptocurrencies or stock exchanges.

USE DIGITAL MARKETPLACES TO TRADE BITCOIN

As is well known, Bitcoin has existed since 2009. After the crypto currency came onto the market, the need for marketplaces quickly arose: buyers and sellers meet on these digital marketplaces to trade their crypto coins.

Such marketplaces still exist today. However, their concept has various disadvantages: The trade always takes place directly between the buyers and the sellers. The operator of the marketplace, on the other hand, only provides the necessary infrastructure.

This means that the transactions are often quite slow. For this reason, exchanges for cryptocurrencies have also developed that have a different concept.

CRYPTOCURRENCY EXCHANGES

Crypto exchanges are also an alternative to Bitcoin ETN. With such an exchange, transactions are usually quick.

Even with these exchanges, however, it is necessary as an investor to have a crypto wallet. This is a digital wallet to store the crypto coins.

It happens again and again that hackers try to gain access to such wallets.

Another way to trade the Bitcoin, for example, is to use a CFD broker. We’ll go into this in more detail below.

In summary, this means:

  • Bitcoins can, for example, be bought on a digital marketplace for cryptocurrencies
  • However, the transactions here are often quite slow
  • In the case of a digital exchange, on the other hand, trading takes place directly with the exchange operator
  • Because of this, buying and selling tend to work faster too
  • Investors need a crypto wallet on digital marketplaces and crypto exchanges
  • Another way to trade crypto coins is to use a CFD broker

Use as an alternative to a Bitcoin ETN CFD

CFDs are a very good way to benefit from the price movements of various underlyings. Examples for this are:

  • Stock indices
  • Currencies
  • Precious metals

In addition, nowadays you can also trade crypto currencies such as Bitcoin with a CFD broker. With most brokers, 100 euros are enough to open an account.

Trading with CFDs, for example, also has the advantage that you can use leverage.

Very good providers can be found easily with our broker comparison.

The price development of the bitcoin

As shown, there are various options as an investor to benefit from Bitcoin’s price movements. For example, you can use Bitcoin ETN or crypto CFD.

In both cases it is important to know about the Bitcoin price development. Therefore, we will go into this topic in more detail below.

STEEP PRICE INCREASES IN THE CRYPTOCURRENCY

Many investors should be amazed at how cheaply you could buy Bitcoin a few years ago. Because the cryptocurrency is now over USD 60,000.

In 2017, however, you still had the opportunity to buy the cryptocurrency at a price of less than USD 1,000. In just twelve months, however, the Crypto Coin had managed to rise to just under USD 20,000.

It is precisely because of such price movements that many investors are interested in Bitcoin ETN.

The exchange rate fluctuations can be very strong with the cryptocurrency. For example, there was a very pronounced correction after prices hit the $ 20,000 area.

Bitcoin then even fell below USD 4,000. However, this was the last opportunity that you could buy the crypto currency at such a low price.

BITCOIN CONTINUES TO RISE

Even during the Corona crisis, prices only fell to around USD 10,000. However, this area was then used again by many investors to get into the Crypto Coin.

In the meantime, however, the Bitcoin rates have risen to over USD 60,000. Many investors assume that the prices will double again.

Due to the strong demand for the Crypto Coin, this also appears to be quite possible. Bitcoin ETN, for example, can be used to benefit from this.

In summary, this means:

  • The rate fluctuations can be very strong with crypto currencies like Bitcoin
  • In 2017, the BTC was still available for less than USD 1,000
  • In the meantime, however, the crypto coin has risen to over USD 60,000
  • The rate could double again

What does the future of Bitcoin ETN look like?

Bitcoin ETN: invest easily in the BTC

As I said, Bitcoin ETNs are a great way for investors to benefit from BTC price movements.

As shown, the disadvantage is, for example, that you bear the insolvency risk of the fund.

Many investors are therefore wondering when they can trade with an ETF on the Bitcoin. We had already mentioned that at the moment this is only possible with ETFs that invest in Bitcoin futures.

This begs the question of when it will be possible to buy the ETF directly from Bitcoin. Because ETFs have the great advantage that their assets are special assets. Therefore, as an investor, you are protected in the event of bankruptcy.

So far, however, such ETFs have not been approved by the US stock exchange regulator. As an investor, you have to wait and see. Or you can use alternatives such as crypto CFD.

Test trading with BTC

If you intend to trade Bitcoin in the future, you can try it out on a free demo account, for example. You can open such a demo account with many brokers in just a few minutes.

A demo account is a very good way to get used to the price movements of Crypto Coins. This is also helpful, for example, if you want to use a Bitcoin ETN for investing.

A demo account is always well suited to familiarize yourself with the broker’s platforms. With many providers, you already have the opportunity to use the training courses during the demo phase.

Since trading on the demo account takes place with virtual money, investors have no risk at all.

As part of our tests, for example, we also check how well the demo accounts of the various brokers can be used.

Conclusion: Bitcoin ETN have strengths and weaknesses

As shown, Bitcoin ETN are an interesting way to benefit from the price movements of the BTC. The fact that coins are usually actually bought speaks in favor of ETN. These are then usually stored in cold wallets.

The disadvantage of ETN, however, is that investors bear the risk of bankruptcy. This is where the ETN differs from ETF.

One thing they have in common, however, is that ETN can also be traded on the stock exchange.

As an investor, however, you can also use an online broker to buy Bitcoin, for example. Trading also simply works if you choose a CFD broker.

There you also have the advantage, for example, that you can create a free demo account. We also recommend our current CFD broker comparison.

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